'Closed for business': Petroleum group lashes McGowan government's new gas rules
ByHamish Hastie
August 17, 2020 — 5.19pmThe country's peak petroleum body has criticised the McGowan government's new domestic gas policy, warning future projects are at risk.
On Monday morning WA Premier Mark McGowan announced changes to the state's domestic gas policy that prevented onshore gas extracted in WA from being exported overseas or east in an effort to bring down local energy prices.
The Waitsia field is set to be the first onshore field to supply gas into the North West Shelf LNG plant.CREDIT:KARL SCHWERDTFEGER
The only onshore gas project to get an exemption was the Kerry Stokes-backed Beach Energy, Mitsui and Co joint venture at the Waitsia gas field, which has been given the green light to send its gas overseas via Woodside's Karratha Gas Plant from 2023.
The new policy does not have the support of the Australian Petroleum Production and Exploration Association, which claims it runs counter to the WA government's COVID-19 economic recovery plan.
APPEA WA director Claire Wilkinson lashed the policy change, saying WA already had a good supply of gas under the existing policy. She warned the change would stifle future investment.
"Cutting off a potential market for any gas developed is a sure way to signal that WA is not open for business," she said.
"The policy settings were already bringing gas to market that WA needs, so this added restriction may actually do the opposite to what the government expects and will reduce future gas developments.
"In short, a project that could be viable if developed for both the domestic and export market may not be commercially viable if developed for the domestic market only."
A recent APPEA survey showed 89 per cent of members had deferred project investment as a result of COVID-19, she said.
"[The] announcement by the WA Government serves only to reduce investment confidence even further."
Ms Wilkinson said there had also been no industry consultation.
“It is extremely concerning that with a flick of a pen, and not as much as a discussion with industry, that the future prosperity natural gas can provide would be put at risk," she said.
In his announcement, Mr McGowan said the updated policy would ensure the state could continue to access reliable and affordable gas.
The WA government was contacted for further comment.
The policy hasn't worried another WA onshore gas player Strike Energy, who in May announced it had selected a proponent to build a $200 million processing plant in the Mid West.
Strike Energy managing director and chief executive Stuart Nicholls said the policy was not unexpected and would actually have the opposite effect of what the government intended.
"The updates to the policy are about trying to ensure future (Perth Basin) gas resources are directed into the WA market over export. However, the market is expected to be short and void of new supply sources right at the time when the Waitsia joint venture has been granted an exception to these new rules," he said.
"In the short term, whilst Waitsia supplies the [Karratha Gas Plant] North West Shelf this will create a less competitive WA gas market which will in turn cause prices to rise.
"However, at Strike we are ready to pick up the slack as we are firmly focused on our development program, ensuring that gas in WA remains an abundant, affordable and a competitive source of energy."
The new policy has also drawn criticism from environmental groups.
The anti-fracking Lock the Gate Alliance said the exemption granted to the Waitsia project appeared to effectively give it a green light before the full environmental assessment had even been completed.
https://www.theage.com.au/national/western-australia/closed-for-business-petroleum-group-lashes-mcgowan-government-s-new-gas-rules-20200817-p55ml2.html
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